July 18, 2014

Part-Time for Economic Reasons: A Cross-Industry Comparison

With employment trends having turned solidly positive in recent months, attention has focused on the quality of the jobs created. See, for example, the different perspectives of Mortimer Zuckerman in the Wall Street Journal and Derek Thompson in the Atlantic. Zuckerman highlights the persistently elevated level of part-time employment—a legacy of the cutbacks firms made during the recession—whereas Thompson points out that most employment growth on net since the end of the recession has come in the form of full-time jobs.

In measuring labor market slack, the part-time issue boils down to how much of the elevated level of part-time employment represents underutilized labor resources. The U-6 measure of unemployment, produced by the U.S. Bureau of Labor Statistics, counts as unemployed people who say they want to and are able to work a full-time schedule but are working part-time because of slack work or business conditions, or because they could find only part-time work. These individuals are usually referred to as working part-time for economic reasons (PTER). Other part-time workers are classified as working part-time for non-economic reasons (PTNER). Policymakers have been talking a lot about U-6 recently. See for example, here and here.

The "lollipop" chart below sheds some light on the diversity of the share of employment that is PTER and PTNER across industries. The "lolly" end of the lollipop denotes the average mix of employment that is PTER and PTNER in 2013 within each industry, and the size of the lolly represents the size of the industry. The bottom of the "stem" of each lollipop is the average PTER/PTNER mix in 2007. The red square lollipop is the percent of all employment that is PTER and PTNER for the United States as a whole. (Note that the industry classification is based on the worker's main job. Part-time is defined as less than 35 hours a week.)

The percent of the workforce that is part time varies greatly across industries (compare for example, durable goods manufacturing with restaurants).

All industries have a greater share of PTNER workers than PTER workers (for example, the restaurant industry in 2013 had 32 percent of workers who said they were PTNER and about 13 percent who declared themselves as PTER).

All industries had a greater share of PTER workers in 2013 than in 2007 (all the lollipops point upwards).

Most industries have a lower share of PTNER workers than in the past (most of the lollipops lean to the left).

Most industries have a greater share of part-time workers (PTER + PTNER) than in the past (the increase in PTER exceeds the decline in PTNER for most industries).

Another fact that is a bit harder to see from this chart is that in 2007, industries with the largest part-time workforces did not necessarily have the largest PTER workforces. In 2013, it was more common for a large part-time workforce to be associated with a large PTER workforce. In other words, the growth in part-time worker utilization in industries such as restaurants and some segments of retail has bought with it more people who are working part-time involuntarily.

So the increase in PTER since 2007 is widespread. But is that a secular trend? If it is, then the increase in the PTER share would be evident since the recession as well. The next lollipop chart presents evidence by comparing 2013 with 2012:

This chart shows a recent general improvement. In fact, 25 of the 36 industries pictured in the chart above have experienced a decline in the share of PTER, and 21 of the 36 have a smaller portion working part-time in total. Exceptions are concentrated in retail, an industry that represents a large share of employment. In total, 20 percent of people are employed in industries that experienced an increase in PTER from 2012 to 2013. So while overall there has been a fairly widespread (but modest) recent improvement in the situation, the percent of the workforce working part-time for economic reasons remains elevated compared with 2007 for all industries. Further, many people are employed in industries that are still experiencing gains in the share that is PTER.

Why has the PTER share continued to increase for some industries? Are people who normally work full-time jobs still grasping those part-time retail jobs until something else becomes available, has there been a shift in the use of part-time workers in those industries, or is there a greater demand for full-time jobs than before the recession? We'll keep digging.

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